Understanding Business Interruption Insurance: Coverage, Claims and Common Denials
Oklahoma relies on small businesses and large corporations to keep its economy running. While many Oklahomans operate successful businesses in the Sooner State, interruptions can happen. Business interruption insurance exists to fill that gap. If businesses are forced to close or cease business operations temporarily, interruption insurance can help cover operating expenses.
Your insurance company may wrongfully deny your claim even if you have adequate business interruption insurance. If you need help navigating the insurance process or challenging a wrongful denial, Aizenman Law Group is here to assist you. We’ll negotiate and litigate against insurance companies on your behalf to secure the coverage your business deserves in its time of need.
What Financial Losses Does Business Interruption Insurance Cover?
If business operations are temporarily suspended, financial losses will undoubtedly occur. Business interruption insurance protects against those losses by covering profit plus expenses that continue during the loss. Different policy types may cover different disruptions.
For example, cancellation insurance protects against liabilities from unforeseen events, while contingent business interruption insurance protects against supply chain interruptions. Depending on your policy’s terms, covered expenses may include:
- Debt Repayment
- Lost Income or Profits
- Relocation Costs
- Operating Expenses
- Payroll
Understanding your policy’s terms before purchasing coverage will help you avoid financial losses or unnecessary denials. Review the terms of your agreement thoroughly, as few insurance policies are identical. If you’re facing challenges with a claim, speak to the dedicated Oklahoma business disruption claims attorneys at Aizenman Law Group.
What Events Trigger Business Interruption Insurance?
Business interruption insurance is typically triggered by a “covered peril.” A covered peril is a loss included in your commercial policy’s language that causes a business interruption. Commercial policies usually require direct physical property loss. Covered Perils may consist of:
- Fires
- Tornados
- Hurricanes
- Windstorms
- Theft
- Earthquakes
- Floods
- Vandalism
- Hail
Whether business interruption insurance covers these specific events depends on the policy language. Often, business owners must obtain separate coverage for damage caused by fires, floods, and other natural disasters, as these are commonly excluded from standard business interruption insurance policies. Additionally, exclusions often include perils like cyberattacks, or intentional acts. Understanding these exclusions is crucial to avoiding unexpected denials and ensuring your business has adequate protection.
Regardless of the specific covered peril, insurance companies are only obligated to cover events that actually caused the policyholder’s losses. Additionally, insurance companies will seldom provide coverage exceeding the policy limits.
Different Types of Coverage and How They Protect Your Business
Policy protections vary depending on the type of business interruption coverage available. Obtaining the correct coverage can prevent losses sustained from claim denials and inadequate policy limits. Coverage types include:
- Business Income Coverage: This coverage helps businesses remain financially stable during a loss period by covering net income (profit) that would have been earned and essential operating expenses, such as rent, utilities, and payroll.
- Contingent Business Interruption Coverage: This coverage comes into play when a business supplier cannot deliver the necessary goods for the business to operate. For example, suppose a tornado destroys a supplier’s truck fleet. In that case, this type of coverage protects the business from losses caused by the disruption, even though another company’s property was physically damaged.
- Specialized Business Interruption Coverage: This coverage type can be triggered without physical property damage. For example, certain businesses may obtain interruption coverage for infectious diseases that temporarily halt operations.
- Civil Authority Coverage: A civil authority clause is standard in most business interruption insurance policies. Civil authority coverage covers income loss if a civil authority, such as a state governmental agency, prohibits access to a building due to physical damage to a nearby property.
Since tremendous variation exists between interruption policy types, it’s easy to misunderstand your specific policy type and available coverage. Your claim may be denied if your policy doesn’t cover the specific event that causes your business’ financial loss. In that case, you’ll need to contact an Oklahoma insurance claims attorney from Aizenman Law Group to review your chances for a successful appeal or explain alternative coverage options.
Navigating the Claims Process
Filing a business interruption insurance claim requires careful preparation and detailed documentation of the covered peril and its impact on business operations. Insurers may rely on insufficient proof of loss as a basis for denial. They may also allege procedural errors, such as untimely filing or improperly completed paperwork, to justify their decision.
To help protect your business, be sure to follow these steps:
- Document Your Damage: Be sure to take photos and videos of the damage to your property, equipment and inventory. Keep all your receipts for emergency repairs or purchases you made related to the incident.
- Gather Financial Records: Make sure you have recent copies of profit and loss statements, tax returns along with payroll records to substantiate your claim.
- Know your Policy: Understand your policy, including its coverage, limits and exclusions. Look for specific requirements, like timeliness for filing or additional documentation.
Example: A Tulsa-based bakery suffers flood damage, and they file a claim. Unfortunately, their claim was denied because they failed to provide an updated inventory list that would verify their losses. This goes to underscore the importance of being meticulous when gathering documentation to support your claim.
Navigating this process can be overwhelming, especially after a significant business loss. A skilled legal team can guide you through each step, helping you avoid common pitfalls and wrongful denials. Before speaking to your insurance company, consult an attorney. Adjusters may use your statements to justify reducing or denying your claim.
What if My Business Disruption Claim is Denied?
Insurance adjusters will review your claim to deny coverage at every possible opportunity. While a physical loss to your business has devastating effects, a wrongful insurance claim denial will only exacerbate the loss. Luckily, help is available. The legal team at Aizenman Law Group has the experience and resources to give you the legal representation you deserve.
Our attorneys will start by reviewing your claim at no cost to you. Based on the policy language, we’ll determine if the insurer’s denial was in bad faith (misrepresentation and unnecessary delays) or justified. While reading a policy may seem simple, insurance policies are always laden with technical language and exclusions inaccessible to an untrained eye. Our lawyers will recognize improperly excluded losses and errors in the insurance company’s reasoning, including unreasonable demands for documentation.
After reviewing your policy, we will handle all communications with your insurance company. Our interactions will be strategically designed to help you receive coverage. We will leverage our knowledge of Oklahoma insurance laws to counter deceptive tactics like delays and lowball offers.
If negotiations stall, we will initiate legal action by filing a lawsuit seeking damages for your losses and holding the company accountable for unfair practices. We’ll take your case to trial and advocate for you before the judge or jury if necessary.
Contact Aizenman Law Group Today
If your business interruption insurance claim has been denied, now is not the time to wait. Following an interruption, your business may risk irreparable harm from unpaid operating expenses, payroll, and other liabilities.
With your livelihood at stake, you can count on the professionals at Aizenman Law Group to advocate for your best interests and prevent wrongful denials from jeopardizing your future. Act quickly to protect your business and secure the compensation you deserve. Call Aizenman Law Group at 918-215-8856 at any time day or night. Our team is ready to review your unique situation and develop a plan for the future.
